Theory Consumer Behavior the Success or Failure Essay

Excerpt from Essay :

Theory

Consumer Behavior

The success or failure of an organization unreservedly depends upon the behavior of consumers towards its products or services (Kotler, 2010). Consumers have now become more knowledgeable and conscious towards choosing and consuming products. They do not just buy a product; but make a relationship with that brand and the manufacturer of that product (Oliver, 1999). This relationship reflects their consumption patterns and brand preference. This is the fact which business organizations must recognize about consumer behavior (Farley, 1964). To stumble upon this consumer behavior, organizations use different marketing and promotional strategies to stay competitive within their respective industries. In this way, they explore what is their potential target market and what they can do to meet these consumption demands (Kotler, Brown, Burton, Deans, & Armstrong, 2010).

The purpose of this paper is to analyze the behavior of consumers towards the products offered by one of the most competitive and successful organizations in the World -- Nestle. It starts with a brief introduction to the Nestle organization; its products, location, and industry, and then explains the different factors that directly or indirectly influence the consumer behavior towards its products. In later sections, it explains the positioning strategies which Nestle has instituted to encounter this behavior and recommends some marketing strategies to improve it in order to ensure a sustainable business success.

Nestle -- the worldwide market leader in food and beverages industry

About Nestle: History, Location, and Industry:

Nestle is the global market leader in producing a wide variety of food and beverages. It offers its highest quality products for every age group for any time requirements; from sunrise to darkness (Nestle.com, 2011). It was established in 1866. The founder of this giant organization was Mr. Henri Nestle who started it in Switzerland and now it serves the customers round the Globe with more than 10,000 products and 8500 different brands. Its total employees are about 280,000 and have presence in 130 countries with 500 factories (Nestle.com, 2011).

Nestle is the strongest and the most competitive organization in its industry which has the ability to actively respond to the changes in business environment all over the world. Nestle can be viewed as an ideal organization in the food and beverages industry in terms of operational excellence. The products manufactured by Nestle have a very high level of acceptability among their consumers (Nestle.com, 2011).

Nestle Products and Brands categories:

Nestle is the strongest brand in the food and beverages industry; mainly engaged in manufacturing, processing, marketing, and sale of safe, nutritious, and tasty food products (Nestle.com, 2011). The main product offerings of Nestle organization fall under the categories of baby foods, bottled water, cereals, chocolate & confectionery, coffee, culinary, chilled & frozen food, dairy, drinks, food service, healthcare nutrition, ice cream, pet care, sports nutrition, weight management, and many other food and beverages brands (Nestle.com, 2011).

Main Factors that influence Consumer Perception towards Nestle Products

Nestle operates in such an industry which is highly exposed to positive and negative consumer perceptions. There are various factors that influence the consumers' choice of consumable products from a wide range of available options offered by a large number of manufactures, but Nestle; being a successful and high quality products manufacturer, have some specific influential factors for consumer behavior towards all its product offerings. These influential factors have a direct impact on its sales, market share, profitability, cyclicality, and overall competitive intensity in the industry (Nestle.com, 2011). In the following section, these factors are discussed in detail:

Brand Perception -- High Quality, Safe, Nutritious, and Tasty Food Manufacturer:

Brand perception can be explained in the light of these two influential factors:

1. Quality

2. Price

Nestle is a well-recognized and highly appreciated brand in the food and beverages industry all over the world with respect to its highly nutritious and healthy products. This is the biggest influential factor for Nestle that significantly affects the consumer behavior and perception towards all its products. Consumers from all over the world always prefer this brand among all its competitors. This thing has developed a strong brand loyalty of these consumers for Nestle brands.

Keeping all the minor factors aside, a positive brand perception either develops from high quality or competitive price of a product or service (Kotler, Brown, Burton, Deans, & Armstrong, 2010). But in case of Nestle, brand perception has come from both these factors. Nestle products are among the most preferred choices with respect to quality. Due to this high quality, consumers are willing to pay a high price for Nestle products. Another reason for this willingness is the fact that consumers perceive a high priced product as a quality product. Therefore Nestle does not face any difficulty in selling its products at a higher price than its competitors. Similarly, consumers strongly believe that no other manufacturer can provide them such high quality and nutritious products in low price. So Nestle price is also acceptable for every type of consumer. Based on this classification, the perceptual map for brand perception factor can be developed in two ways; taking quality and price on vertical and horizontal axis respectively. Nestle; being a high quality and high price food and beverages brand, is placed on the right upper quarter of the map. This perceptual mapping framework also shows a comparison of Nestle with its top competitors; like Unilever, Hershey, and Schweppes in order to have a closer look on what consumers perceive about these top brands of the industry. As per this perceptual map, Nestle is the highest quality food products manufacturer (shares this position with Unilever), but charges the highest price than any other competitor (Refer to Figure 1).

3. Wide Range and variety of Product Offerings -- Various Alternatives to choose from:

Nestle is not just eminent and liked for its quality and brand loyalty, its diverse ranges of products have also contributed towards its success and high acceptability in the industry (Nestle.com, 2011). Almost all of the Nestle food and beverages brands of baby foods, chocolate, confectionery, culinary, dairy, drinks, healthcare nutrition, ice cream, sports nutrition, weight management, etc. are available in different flavors and varieties. It means consumers have a lot more choice to select from any of those flavors and varieties before thinking of some other brand (Nestle.com, 2011).

Based on types or variety in any one particular product offering, a perceptual mapping framework for Nestle can be developed in the following way:

It is clear from the above figure (Refer to Figure 2) that Nestle offers more variety in its products than its biggest competitor, Unilever. But if the same is seen from the perspective of level of acceptability, Nestle has gone astray its first position from this equally strong competitor. Although Nestle provides more variety and types in any particular brand (for example; in health nutrition products, dairy products, personal care products, etc.), but they all do not have same high level of acceptability among the general public. Converse to this position, most of the Unilever product varieties have higher level of acceptability than Nestle product varieties and types.

4. Product Attributes:

In addition to brand loyalty and level of acceptability, product attributes is another important factor that makes a product successful or flop in the perception of general consumers. A product may have a wide range of flavors and variety of categories, but if it does not have those features which a consumer is looking for, it is just a useless and failed product for that consumer (Waterschoot & Bulte, 1992).

As far as Nestle products are concerned, they are always manufactured keeping in view the requirements of the consumers (Nestle.com, 2011). Nestle realizes the fact that every one does not have the same needs, desires, and wants; therefore it offers variety of products for all age groups and different time requirements (Nestle.com, 2011). Thus, every product has some specific attributes that truly meet these requirements and persuade the potential consumers to prefer this product over all other good or unknown brands. To construct a perceptual mapping framework for this influential factor (product attributes), a soft drink product of Nestle is taken as an example.

What does a consumer want in a soft drink? A soft drink manufactured by a quality manufacturer like Nestle may have product attributes like healthy and nutritious, tasty, easily available in the market, refreshing, thirst quenching, sparkling, youthful, etc. (Nestle.com, 2011).

In the following perceptual mapping framework, all these product attributes are drawn for Nestle. Nestle soft drinks fully meet all these attributes except 'easy availability'. Reason being, Nestle soft drinks are not available in small cities and towns of many countries of the World. Based on all these attributes, Nestle can be assertively placed in the nearest position to the core of this framework, that is; the center of the map (Refer to Figure 3). The 'easy availability' factor has heaved it from being a perfect product of its type.

The Positioning Strategy implemented by Nestle to achieve the desired…

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